Market Update Newsletter 1/18/23

Markets were mixed yesterday, with the Nasdaq closing slightly higher, the Dow Jones down over 1%, and the S&P 500 down slightly. Bitcoin is still sitting around $21k. Futures are pointing towards a higher open.

Higher interest rates stifled mortgage demand, as prices for loans became more costly. This could be coming to an end as demand for mortgages jumped 28% last week while interest rates dropped to the lowest point in months. This is a good sign.

Wholesale prices fell 0.5% in December, which is much more than the expected 0.1%. Is this a sign that inflation is easing? The FED wants to bring inflation under control, is it working?

Stocks to Watch

Morgan Stanley (MS) had a decent quarter, beating revenue and EPS, and had a little rally yesterday. Higher interest rates are beneficial to conventional banks. Morgan Stanley also has had some great numbers in its wealth management divisions. The stock received multiple price increases today.

Goldman Sachs (GS) is a less "conventional" bank. GS makes money with mergers and big business accounts. As large firms lay off workers and try to cut costs, the appetite for mergers and acquisitions became less in recent memory. Goldman misses its quarter after an earnings miss and received a price target cut.

United Health (UNH) received a price target reduction. The stock is a great place to weather a turbulent market. As conditions improve, analysts must pivot to what will be popular for investors. It seems that the appetite for "safer" defensive stocks could be waning in favor of more "risky" stocks like tech.

Happy Investing!

The Punkrock Capitalist